A run on the lira proved a pivotal moment for Turkey’s financial markets in 2018, prompting action from Ankara that has tilted the economy inward and frightened off foreign investors.
Turkish President Tayyip Erdogan, his government and his deputies have said the measures taken, which sparked an exodus of foreign money, were needed to stabilize the economy and bolster belief in the lira, which has dropped 36% in two years.
But the impact on investment in what was once a darling of emerging markets has been dramatic. The World Bank estimates that net foreign direct investment, which fell 30% last year, will not regain 2018 levels until after 2021.
For import-dependent Turkey, some analysts say the danger is that this outflow could over time starve the Middle East’s top economy of funds and stall Erdogan’s recovery plans.
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